Comments on: How Do or Can I Settle My Debts on My Own? – Shawna http://getoutofdebt.org/7729/i-want-to-pay-off-my-20000-in-credit-card-debt-with-a-15000-loan-from-mom-shawna Free debt help and debt advice on how to get out of debt, getting out of debt consolidation scams, and inside information on the debt relief and debt help industry. Mon, 13 Feb 2012 01:25:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Steve Rhode http://getoutofdebt.org/7729/i-want-to-pay-off-my-20000-in-credit-card-debt-with-a-15000-loan-from-mom-shawna#comment-21832 Steve Rhode Thu, 13 May 2010 15:48:01 +0000 http://getoutofdebt.org/?p=7729#comment-21832 Katrina, I love your statement "<strong>ruined credit is fixable</strong>." Oh how true that is. People often make worse mistakes wasting time trying to preserve their credit than just to bit the bullet and deal with the problem head-on and then rebuild their credit afterwards. Steve Katrina,

I love your statement “ruined credit is fixable.” Oh how true that is. People often make worse mistakes wasting time trying to preserve their credit than just to bit the bullet and deal with the problem head-on and then rebuild their credit afterwards.

Steve

]]> By: Katrina http://getoutofdebt.org/7729/i-want-to-pay-off-my-20000-in-credit-card-debt-with-a-15000-loan-from-mom-shawna#comment-21831 Katrina Thu, 13 May 2010 15:43:43 +0000 http://getoutofdebt.org/?p=7729#comment-21831 Shawna ... I agree with everything Steve has written here. It's pretty brutal to look at and realize what your path is, but it is the truth. And Steve really hits it home by making a point you can do this yourself or pay someone $4,500 to do it for you. You are better off swallow this hard pill yourself and being your own shoulder to lean on. Ruined credit IS fixable. All in all, you don't really need or it to be perfect right now because I doubt you'll be considering a new car or mortgage in the next few years. You'll be focusing on getting out of debt. Shawna … I agree with everything Steve has written here. It’s pretty brutal to look at and realize what your path is, but it is the truth. And Steve really hits it home by making a point you can do this yourself or pay someone $4,500 to do it for you. You are better off swallow this hard pill yourself and being your own shoulder to lean on. Ruined credit IS fixable. All in all, you don’t really need or it to be perfect right now because I doubt you’ll be considering a new car or mortgage in the next few years. You’ll be focusing on getting out of debt.

]]> By: Shawn N. Wright http://getoutofdebt.org/7729/i-want-to-pay-off-my-20000-in-credit-card-debt-with-a-15000-loan-from-mom-shawna#comment-19210 Shawn N. Wright Sat, 30 Jan 2010 01:16:35 +0000 http://getoutofdebt.org/?p=7729#comment-19210 Two quick points. First, when you compare debt settlement versus bankruptcy, one big difference is that there's no automatic stay while doing debt settlement. Simply, the automatic stay is the protection from the Court against all of the creditors. When you file bankruptcy, you have no more nagging phone calls from creditors, and no worries about being sued. Conversely, when you're going through debt settlement, the phone continues to ring incessantly until all the debts are settled, and you might be sued. Second, when you're in debt settlement mode, and your debts have "charged off", i.e., been assigned to third-party debt collection companies, then you probably will not be issued a 1099-C either. Since they aren't the original creditor, they're not entitled to issue a 1099-C. Good point though, Carl, about the Form 982. Debt settlement though sure does create a lot more worry though than filing a Chapter 7 bankruptcy case. .-= Shawn N. Wright´s last blog ..<a href="http://pittsburgh-bankruptcy-law.com/?p=104" rel="nofollow">How Long Will My Chapter 7 Bankruptcy Case Take?</a> =-. Two quick points. First, when you compare debt settlement versus bankruptcy, one big difference is that there’s no automatic stay while doing debt settlement. Simply, the automatic stay is the protection from the Court against all of the creditors. When you file bankruptcy, you have no more nagging phone calls from creditors, and no worries about being sued. Conversely, when you’re going through debt settlement, the phone continues to ring incessantly until all the debts are settled, and you might be sued.

Second, when you’re in debt settlement mode, and your debts have “charged off”, i.e., been assigned to third-party debt collection companies, then you probably will not be issued a 1099-C either. Since they aren’t the original creditor, they’re not entitled to issue a 1099-C.

Good point though, Carl, about the Form 982. Debt settlement though sure does create a lot more worry though than filing a Chapter 7 bankruptcy case.
.-= Shawn N. Wright´s last blog ..How Long Will My Chapter 7 Bankruptcy Case Take? =-.

]]> By: Steve Rhode http://getoutofdebt.org/7729/i-want-to-pay-off-my-20000-in-credit-card-debt-with-a-15000-loan-from-mom-shawna#comment-14815 Steve Rhode Thu, 13 Aug 2009 18:48:15 +0000 http://getoutofdebt.org/?p=7729#comment-14815 Carl, Damn, thought I had you. Steve Carl,

Damn, thought I had you.

Steve

]]> By: Carl H. Starrett II http://getoutofdebt.org/7729/i-want-to-pay-off-my-20000-in-credit-card-debt-with-a-15000-loan-from-mom-shawna#comment-14814 Carl H. Starrett II Thu, 13 Aug 2009 18:41:19 +0000 http://getoutofdebt.org/?p=7729#comment-14814 Well, I actually did know that but I'm not a tax attorney and didn't want to express an opinion on whether Shawna was legally insolvent. Insolvency is basically when you total debts exceed your total assets. If someone has $10,000 in assets and $20,000, a a creditor forgiving $10,000 is not a taxable event. That same person receiving $15,000 would have $5000 in taxable income. Debt forgiveness achieved in bankruptcy is never taxable, yet another advantage of bankruptcy over debt settlement. .-= Carl H. Starrett II´s last blog ..<a href="http://www.chs-law.com/2009/08/getting-what-you-need-from-bankruptcy.html" rel="nofollow">Getting What You Need From Bankruptcy</a> =-. Well, I actually did know that but I’m not a tax attorney and didn’t want to express an opinion on whether Shawna was legally insolvent.

Insolvency is basically when you total debts exceed your total assets. If someone has $10,000 in assets and $20,000, a a creditor forgiving $10,000 is not a taxable event. That same person receiving $15,000 would have $5000 in taxable income.

Debt forgiveness achieved in bankruptcy is never taxable, yet another advantage of bankruptcy over debt settlement.
.-= Carl H. Starrett II´s last blog ..Getting What You Need From Bankruptcy =-.

]]> By: Steve Rhode http://getoutofdebt.org/7729/i-want-to-pay-off-my-20000-in-credit-card-debt-with-a-15000-loan-from-mom-shawna#comment-14812 Steve Rhode Thu, 13 Aug 2009 18:19:19 +0000 http://getoutofdebt.org/?p=7729#comment-14812 Carl, I think I might have finally got one over on you. You are right about the insolvent thing BUT the IRS says that if the forgiven debt makes you solvent then you owe tax on the amount over your break even point. So if someone is primarily in debt because of credit cards and that is what is making them insolvent, guess what, forgiven debt leaves you solvent and a new friend of the IRS. :-) (Bet you didn't know that one.) Steve Carl,

I think I might have finally got one over on you. You are right about the insolvent thing BUT the IRS says that if the forgiven debt makes you solvent then you owe tax on the amount over your break even point. So if someone is primarily in debt because of credit cards and that is what is making them insolvent, guess what, forgiven debt leaves you solvent and a new friend of the IRS. :-)

(Bet you didn’t know that one.)

Steve

]]> By: Carl H. Starrett II http://getoutofdebt.org/7729/i-want-to-pay-off-my-20000-in-credit-card-debt-with-a-15000-loan-from-mom-shawna#comment-14810 Carl H. Starrett II Thu, 13 Aug 2009 18:05:56 +0000 http://getoutofdebt.org/?p=7729#comment-14810 I agree with almost everything Steven says on this with one minor exception. Debtor forgiveness received at a time when is debtor is legally insolvent is not taxable. You will receive a 1099 from each creditor and will need to file form 982 with your taxes to show that the the debt forgiveness income is not taxable. You would need to have a CPA review your situation to see if qualify to claim insolvency on your taxes. Your situation is fairly typical and makes me really wonder why people try so hard to avoid bankruptcy. By the time you settle, your credit will already be hosed AND you will ow mom a nice chunk of change. Sure, you might get them to settle for 50% or less of what you oh, but so what? You are still indebted to your mom for a sum that isn't exactly very small. Instead, why don't you just borrow $2000-$2500 and go hire a good bankruptcy attorney? Your credit probably can't get much worse than it already will get and most of my clients see an improvement in their credit score within a year after receiving their discharge. .-= Carl H. Starrett II´s last blog ..<a href="http://www.chs-law.com/2009/08/getting-what-you-need-from-bankruptcy.html" rel="nofollow">Getting What You Need From Bankruptcy</a> =-. I agree with almost everything Steven says on this with one minor exception. Debtor forgiveness received at a time when is debtor is legally insolvent is not taxable. You will receive a 1099 from each creditor and will need to file form 982 with your taxes to show that the the debt forgiveness income is not taxable. You would need to have a CPA review your situation to see if qualify to claim insolvency on your taxes.

Your situation is fairly typical and makes me really wonder why people try so hard to avoid bankruptcy. By the time you settle, your credit will already be hosed AND you will ow mom a nice chunk of change. Sure, you might get them to settle for 50% or less of what you oh, but so what? You are still indebted to your mom for a sum that isn’t exactly very small.

Instead, why don’t you just borrow $2000-$2500 and go hire a good bankruptcy attorney? Your credit probably can’t get much worse than it already will get and most of my clients see an improvement in their credit score within a year after receiving their discharge.
.-= Carl H. Starrett II´s last blog ..Getting What You Need From Bankruptcy =-.

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